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Peer Effects in the Workplace

Listed author(s):
  • Thomas Cornelissen
  • Christian Dustmann
  • Uta Schönberg

Existing evidence on peer effects in the productivity of coworkers stems from either laboratory experiments or real-world studies referring to a specific firm or occupation. In this paper, we aim at providing more generalizable results by investigating a large local labor market, with a focus on peer effects in wages rather than productivity. Our estimation strategy--which links the average permanent productivity of workers' peers to their wages--circumvents the reflection problem and accounts for endogenous sorting of workers into peer groups and firms. On average over all occupations, and in the type of high-skilled occupations investigated in studies on knowledge spillover, we find only small peer effects in wages. In the type of low-skilled occupations analyzed in extant studies on social pressure, in contrast, we find larger peer effects, about one-half the size of those identified in similar studies on productivity.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 107 (2017)
Issue (Month): 2 (February)
Pages: 425-456

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Handle: RePEc:aea:aecrev:v:107:y:2017:i:2:p:425-56
Note: DOI: 10.1257/aer.20141300
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